How Direct-to-Consumer Brands Are Upending Marketing

Consumer brands have long understood the importance of marketing to people who already use their products. As the chairman of Procter and Gamble put it back in 1977, “Only when satisfied customers have had firsthand experience with the product will the elements of the marketing mix, such as advertising and selling, be fully productive.”

This much hasn’t changed. What has changed is pretty much everything else.

Across every consumer category, the path to purchase has become multithreaded, involving smartphones, voice assistants and connected TVs, among other channels. Each touchpoint leaves a trail of data that, when properly leveraged, can be used to improve future interactions. At the same time, supply chains have become, in the words of the Interactive Advertising Bureau, “rentable, flexible and affordable,” providing brands with unprecedented access to their consumers, without middlemen.

Together, these changes have given rise to a new breed of direct-to-consumer (DTC) brands, distinguished by their ability to superserve existing customers. By taking advantage of new data streams, these companies have built personalized customer relationship strategies that are responsive to every consumer interaction — regardless of where it occurs. And with their newly flexible supply chains, DTC brands are even using customer data to change how they deliver products and services.

These next-generation organizations don’t just represent the latest evolution of customer relationship management (CRM), they’re changing the face of consumer marketing itself.

What Is a Direct-to-Consumer Brand?

When the Interactive Advertising Bureau (IAB) and Dun and Bradstreet published their list of the top 250 DTC brands earlier this year, it was no surprise when e-commerce brands like Glossier, Warby Parker and Jet.com made the list. But while it’s true that many DTC brands come from e-commerce roots, the distinction between “direct” and “indirect” is more nuanced than just “physical” versus “digital.”

In fact, DTC brands like Allbirds, Casper and Amazon are investing in physical presences, just as historically indirect companies like Adidas and Unilever are growing their DTC offerings. The key difference is that direct brands know who their customers are individually, and they use that knowledge to build enduring, ongoing customer relationships.

Indeed, while relationship marketing has been around for some time, DTC brands are applying it in new ways, creating sophisticated, precision marketing at a scale the world has never seen before.

Different Folks, Different Spokes

What makes this new customer relationship management different is that it’s being executed by new kinds people who bring different skills, goals and technological frames to the table.

Traditionally, CRM was practiced by B2B marketers and a small subset of B2C brands (catalog retailers, loyalty programs and the like). Now it’s everyone, from consumer packaged goods companies to post-cable networks and coffee shop chains. This new CRM is built on the basic premises of traditional CRM, but it has modernized its principles to such a degree as to transform them beyond recognition.

One of the primary reasons so many legacy CRM programs failed was because they didn’t set their sights high enough. They were optimizing for productivity metrics, not strategic ones, and such efforts were largely put under the auspices of IT projects. When the going got tough, which it inevitably does for something as complex as CRM, companies couldn’t muster the C-suite commitment to continue investing.

While the complexity has not gone away, the new CRM is owned and led by front-line business groups — typically marketing — and therefore is focused squarely on growth-oriented objectives like revenue and customer experience. Its leaders are using customer relationships to drive metrics such as the following:

Marketing : New customer acquisition, customer engagement and retention.

Sales : Revenue growth, cross-selling and upselling.

Customer experience : Customer lifetime value, net promoter score.

In DTC companies at least, the leaders of the new CRM have the organizational clout to not only commit the resources necessary, but also rally the stakeholders needed across the organization to achieve their objectives.

For example, when marketers at Gilt wanted to measure the lifetime value of the company’s various acquisition channels, they collected and connected data from not only marketing systems, but also commerce, customer support and content systems. Gilt could not have met its goals had the marketing team been unable to access companywide data, or if it could do so only via weak and brittle integration methods.